Pulse: medical technology report 2011
The companies best positioned for success will be those that develop the new offerings and solutions most relevant to this changing ecosystem.
Publicly traded medtech companies in the US and Europe turned in a solid performance in 2010, providing further evidence that the impact of the global recession on the industry may be lessening.
Can medtech sustain innovation?
Persistent funding challenges for many companies combined with regulatory and pricing pressures and fundamental changes in global health care will require companies to find new ways to sustain innovation in the future.
We take a closer look at the issues.
The noteworthy findings from our report include:
- Net income rises sharply. Net income for non-conglomerates in the US and Europe totaled US$17.4 billion, a 43% increase from 2009. This increase was primarily the result of large, one-time changes in 2009, without which net income growth would have been 9%. Revenues for all public medtech companies totaled US315.9 billion an increase of 4% from the prior year.
- Financings surge – for some. Capital raised by US and European companies in 2010 totaled US$23.6 billion, a 66% increase over 2009. However, this increase was driven by a handful of mature companies that took advantage of historically low interest rates to issue debt. Excluding debt transactions, the amount raised fell by 7.7%. This financing environment has continued in the first six months of 2011, with financing totals reaching US$10.1 billion.
- Venture financing drops. Venture capital investment fell 13% in 2010 compared to the prior year, though the amount raised is still consistent with levels seen in 2005 and 2006 - years at the height of the "easy money" era. Venture funding fell by 15% in the US, to US$3.5 billion, while in Europe venture investment was up 4.7% to US$707 million.
- IPOs rebound slightly. After more than two years of sluggishness, IPO activity picked up in 2010, but at a significantly slower pace than in the years prior to the global recession. A total of nine medtech companies in US or Europe completed IPOs in 2010 compared to two in 2009, grossing a total of US$568 million.
- Deal making returns. The total value of mergers and acquisitions (M&As) in the US and Europe rebounded to US$30.6 billion in 2010, up from an historically low US$15.7 billion in 2009. The average deals size increased from US$175 million to US$245 million.
- Investors become more cautious about growth. We found a growing disconnect between the performance of the medtech industry and investor perceptions. While the median earnings per share of the largest US non-conglomerates have grown steadily over the last decade, the median P/E ratio of these companies has declined over that same time.
To learn more about how we can help your medical technology strategy, contact:
- John Babitt
+1 212 773 0912